Submission on abolition of Flood Re’s annual levy on insurers to the Housing, Local Government

and Transport Commission of Labour’s National Policy Forum

Abolition of Flood Re’s annual levy on insurers would answer in part the question “How can we
increase affordable home ownership for everyone?” asked in the Housing, Local Government and
Transport Commission’s discussion paper.

Flood Re is a reinsurer which allows insurers to pass the flood part of home insurance policies
bought by customers on to Flood Re. Flood Re maintains a central fund to pay for the claims that
arise from policies passed to Flood Re. This central fund comprises two elements: premiums on
flood risks passed to Flood Re by insurers and an annual levy on all insurers authorised to write
home insurance in the UK. This annual levy is currently £180 million per year and is effectively
paid by those insurers’ policyholders.

“[T]he Flood Re system involves people at lower risk of flooding subsidising the insurance of
people at higher risk of flooding” is how Flood Re was described by Clare Moriarty, Permanent
Secretary of the Department for Environment, Food and Rural Affairs, to the House of Commons
Public Accounts Committee on 25th January 2016.

This subsidy is inherently unjust. People who chose to live in areas with higher risks of flooding
should not be subsidised by those who live in areas with lower risks of flooding.

I would like to submit a proposal to abolish Flood Re’s annual levy on all insurers authorised to
write home insurance in the UK.